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Plummeting oil prices seen fueling socioeconomic risks

22 April 2015, 11:15Okoro Chinedu

Lagos - The lowering demand for oil and subsequent drop in revenues from the commodity poses a socioeconomic risk to Nigeria, a global economic think-tank warned.

The sentiments by Rand Merchant Bank (RMB) in its latest Global Markets Report on Wednesday follows gross government revenue plummeted to N314 billion in March from N381,5 billion recorded a month earlier.

This has been attributed to sharp reductions in oil and non-mineral earnings.

Closures of trunk pipelines, which are used to transport oil and petroleum products over considerable distances, severely constrained oil revenues in the first quarter of 2015.

Also Read: Petrol price is lowered ahead of presidential vote

Non-oil earnings are unlikely to account for the shortfall in the 2015 fiscal year given reduced customs duties and challenges in collecting inland revenues owing to security disruptions, necessitating greater onshore and offshore borrowing.

Amid the setback, RMB issued a warning.

“The projected long-term decline in oil revenue therefore poses a broader socioeconomic risk as state and local governments might compromise on service delivery in key areas such as healthcare and education to accommodate lower expenditure.”

Nigeria is the continent’s biggest oil producer.

However, falling demand for the commodity as well plummeting prices has lowered revenues accrued from oil sales.

- CAJ News

Tags oil prices

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